Question

For each transaction, (1) analyze the transaction using the accounting equation, (2) record the transaction in journal entry form, and (3) post the entry using T-accounts to represent ledger accounts. Use the following (partial) chart of accounts—account numbers in parentheses: Cash (101); Accounts Receivable (106); Office Supplies (124); Trucks (153); Equipment (167); Accounts Payable (201); Unearned Landscaping Revenue (236); Common Stock (307); Dividends (319); Landscaping Revenue (403); Wages Expense (601), and Landscaping Expense (696).
A. On May 15, DeShawn Tyler opens a landscaping company called Elegant Lawns by investing $74,000 in cash along with equipment having a $34,000 value in exchange for common stock.
B. On May 21, Elegant Lawns purchases office supplies on credit for $360.
C. On May 25, Elegant Lawns receives $8,200 cash for performing landscaping services.
D. On May 30, Elegant Lawns receives $1,400 cash in advance of providing landscaping services to a customer.

Answer 1

Answer:

A)

Assets + 74,000 cash + 34,000 equipment

Equity + 108,000 common stock

journal entry:

cash           74,000 debit

equipment 34,000 debit

  common stock    108,000 credit

B)

Assets + 360 supplies

Liabilities +360 account payable

journal entry:

supplies 360 debit

   account payable 360 credit

C)

Assets +8,200 cash

Equity +8,200 landscaping revenue

journal entry:

cash   8,200 debit

  landscaping revenue 8,200 credit

D)

Assets + 1,400 cash

Liabilities  +1,400 Unearned Landscaping Revenue

journal entry:

cash  1,400 debit

 Unearned Landscaping Revenue 1,400 credit

T_ accounts

      cash

 debit    credit

A 74,000

C   8,200

D    1,400        

Total 83,600

equipment

debit    credit

A 34,000

common stock

debit   credit

      A 108,000

supplies

debit   credit

B 360

account payable

debit    credit

        B 360

landscaping revenue

debit       credit

         C  8,200

Unearned Landscaping Revenue

 debit       credit

          D   1,400

Explanation:

The T-accounts were made at the end to represen thte effect of all transactiosn combined.

Mostly self-explanatory

Some considerations:

the payment fro mthe customer in advance is considered a liability. That's because now, the company has the obligation to do the landscaping services. The customer can force the company to make them as they are already paid. Second, as accounting works with an accrued basis the job is not done thus, not accrued and we cannot consider this a realized revenue